Problem 2D: Transactions, Accounts, and Financial Statements

Problem 2d: Transactions, Accounts, and Financial Statements

Lane Corporation engaged in the following transactions during May. By addition and subtraction, show the effects of the transactions on Lane Corporation's resources and sources of resources. Notice that the first transaction has been processed for you.

May 1: Joseph Lane invested $7,000 in the company and received 3,500 shares of $2 par common stock.

Resources / Sources of Borrowed Resources / Sources of Owner
Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
+ $7,000 / + $7,000

The company’s receipt of cash increased its resources (assets). The company now has $7,000 more resources (cash) than it had before it received the cash. Since the company did not give up any resources to receive the cash, but received the cash from the owner, the company’s sources of owner invested resources (common stock) increased by $7,000.

1.May 4: Lane Corporation provided $390 of services to a client who agreed to pay on May 22.

Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $390 / + $390
B) / + $390 / + $390
C) / + $390 / + $390
D) / + $390 & - $390
E) / + $390 / - $390

2.May 7: Lane Corporation paid $600 cash for additional supplies.

Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $600 & - $600
B) / + $600 / + $600
C) / + $600 / + $600
D) / + $600 / + $600
E) / + $600 / - $600

3.May 10: Lane Corporation provided $520 of services to a client and received full payment in cash.

Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $520 / - $520
B) / + $520 & - $520
C) / + $520 / + $520
D) / + $520 / + $520
E) / + $520 / - $520

4.May 15: Lane Corporation paid $140 to an employee for work done in the first two weeks of May.

Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $140 & - $140
B) / - $140 / - $140
C) / - $140 / - $140
D) / + $140 / - $140
E) / - $140 / - $140

5.May 18: Lane Corporation purchased $975 of supplies on account. The supplies will be paid in full by June 18.

Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $975 / + $975
B) / + $975 / + $975
C) / + $975 / - $975
D) / + $975 & - $975
E) / + $975 / + $975

6.May 19: Lane Corporation paid a $225 cash dividend to its owner.

Resources / Sources of Borrowed Resources / Sources of Owner
Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / - $225 / - $225
B) / + $225 / - $225
C) / - $225 / - $225
D) / - $225 / + $225
E) / - $225 / - $225

7.May 22: Lane Corporation received full payment from the customer serviced on May 4. (On May 4, Lane Corporation had provided $390 of services to a client who agreed to pay on May 22.)

Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $390 / + $390
B) / + $390 / - $390
C) / + $390 / + $390
D) / + $390 & - $390
E) / + $390 / + $390

8.May 25: Lane Corporation provided $375 of services to a client who agreed to pay on June 25.

Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $375 & - $375
B) / + $375 / + $375
C) / + $375 / + $375
D) / + $375 / + $375
E) / + $375 / + $375

9. May 28: Lane Corporation paid $500 as partial payment for the supplies purchased on May 18. (On May 18, Lane Corporation had purchased $975 of supplies on account.)

Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $500 & - $500
B) / - $500 / - $500
C) / + $500 / + $500
D) / - $500 / - $500
E) / - $500 / + $500

10.May 31: A review of supplies revealed that $450 of supplies had been used up by the end of May.

Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / - $450 / - $450
B) / + $450 / - $450
C) / - $450 / - $450
D) / + $450 & - $450
E) / - $450 / - $450

By addition and subtraction, show the effects of the May transactions on the T accounts of the Lane Corporation. Notice that the first transaction has been processed for you.

May 1: Joseph Lane invested $7,000 in the company and received 3,500 shares of $2 par common stock.

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
7,000 / 7,000

The company’s receipt of cash increased its cash asset by $7,000. Since assets increase with debits, cash is debited for $7,000. The cash was received from the owner and, in return, the owner received shares of common stock. Since debits equal credits, the company’s common stock must be credited for $7,000.

11.May 4: Lane Corporation provided $390 of services to a client who agreed to pay on May 22.

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
A) / 390 / 390
B) / 390 / 390
C) / 390 / 390
D) / 390 / 390
E) / 390 / 390

12.May 7: Lane Corporation paid $600 cash for additional supplies.

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
A) / 600 / 600
B) / 600 / 600
C) / 600 / 600
D) / 600 / 600
E) / 600 / 600

13.May 10: Lane Corporation provided $520 of services to a client and received full payment in cash.

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
A) / 520 / 520
B) / 520 / 520
C) / 520 / 520
D) / 520 / 520
E) / 520 / 520

14.May 15: Lane Corporation paid $140 to an employee for work done in the first two weeks of May.

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
A) / 140 / 140
B) / 140 / 140
C) / 140 / 140
D) / 140 / 140
E) / 140 / 140

15.May 18: Lane Corporation purchased $975 of supplies on account. The supplies will be paid in full by June 18.

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
A) / 975 / 975
B) / 975 / 975
C) / 975 / 975
D) / 975 / 975
E) / 975 / 975

16.May 19: Lane Corporation paid a $225 cash dividend to its owner.

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
A) / 225 / 225
B) / 225 / 225
C) / 225 / 225
D) / 225 / 225
E) / 225 / 225

17.May 22: Lane Corporation received full payment from the customer serviced on May 4. (On May 4, Lane Corporation had provided $390 of services to a client who agreed to pay on May 22.)

18.May 25: Lane Corporation provided $375 of services to a client who agreed to pay on June 25.

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
A) / 375 / 375
B) / 375 / 375
C) / 375 / 375
D) / 375 / 375
E) / 375 / 375

19.May 28: Lane Corporation paid $500 as partial payment for the supplies purchased on May 18. (On May 18, Lane Corporation had purchased $975 of supplies on account.)

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
A) / 500 / 500
B) / 500 / 500
C) / 500 / 500
D) / 500 / 500
E) / 500 / 500

20.May 31: A review of supplies revealed that $450 of supplies had been used up by the end of May.

Assets / = / Liabilities / + / Stockholders' Equity
Cash / + / Accounts
Receivable / + / Supplies / = / Accounts
Payable / + / Common Stock / + / Retained Earnings
A) / 450 / 450
B) / 450 / 450
C) / 450 / 450
D) / 450 / 450
E) / 450 / 450

21.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the Lane Corporation's total revenues for May.

A) / $695
B) / $1,660
C) / $1,285
D) / $470
E) / $520

22.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the Lane Corporation's total expenses for May.

A) / $1,715
B) / $815
C) / $140
D) / $1,465
E) / $590

23.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the Lane Corporation's net income for May.

A) / $695
B) / $470
C) / $6,445
D) / $1,070
E) / $7,945

24.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the Lane Corporation's total assets on May 31.

A) / $7,470
B) / $695
C) / $6,445
D) / $7,945
E) / $475

25.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the Lane Corporation's total liabilities on May 31.

A) / $1,600
B) / $475
C) / $850
D) / $7,945
E) / $695

26.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the Lane Corporation's total stockholders' equity on May 31.

A) / $7,000
B) / $7,945
C) / $7,695
D) / $7,225
E) / $7,470

27.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the dollar amount of Lane Corporation's total resources on May 31.

A) / $695
B) / $6,445
C) / $7,945
D) / $475
E) / $7,470

28.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the dollar amount of resources on May 31 that Lane Corporation obtained through borrowing.

A) / $475
B) / $850
C) / $7,945
D) / $695
E) / $1,600

29.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the dollar amount of resources on May 31 that Lane Corporation obtained through owner's investments.

A) / $7,945
B) / $7,470
C) / $225
D) / $7,000
E) / $695

30.At the end of May, the Lane Corporation’s accounting system showed the following amounts: cash = $6,445, accounts receivable = $375, supplies = $1,125, accounts payable = $475, common stock = $7,000, and retained earnings = $470. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,285, resources used up to provide services to customers = $590, and dividends = $225. Determine the net dollar amount of resources that Lane Corporation generated through management operations in May.

A) / $7,945
B) / $695
C) / $470
D) / $6,445
E) / $1,070